David Cameron came under fresh pressure last night to reverse Labour's hike in income tax for high earners after senior Conservatives denounced the move.

Dominic Grieve, the shadow home secretary, broke the party's silence on the planned increase in the top rate of tax to say that it would be "damaging" and stifle economic activity.

He praised Baroness Thatcher's decision to lower taxes on high earners and said that experience had shown that the rich used their money "to the betterment of everybody".

Mr Grieve was backed by other senior Tories including John Redwood, chair of the party's economic competitiveness commission, who called on the Conservative leader to pledge to scrap the increase.

The comments are significant because Mr Cameron has pointedly stopped short of condemning Gordon Brown's decision to raise the top rate from 40p to 45p in 2011, for people earning more than £150,000 a year.

Insiders say he is fearful of being accused by Labour of siding with the wealthy.

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Last week the shadow chancellor George Osborne pledged to reverse Labour's planned increase in National Insurance Contributions but failed to say what the party would do about income tax if they won a general election.

Mr Grieve told The Sunday Telegraph: "Historical experience shows that one of the best things ever done for the economy was the decision taken when Mrs Thatcher came into office to reduce the burden of taxation on higher earners.

"It stopped the brain drain out of this country, it encouraged people to invest. It undoubtedly rewarded, I am sure, the higher earners. But the higher earners didn't keep their money in socks under the bed, they used that money to inject into the economy to the encouragement and betterment of everybody.

"All historical evidence is that when you start taking taxes up to a certain level you start to produce disincentives for people to produce wealth. At that stage everybody gets impoverished."

Mr Grieve said the Tories would face "imperatives for high taxation" on taking office because of high borrowing and soaring debt which would have to be repaid.

"I can't predict where we're going to be when we get into office, and we're going to have to live with some of the consequences of what the Government does. But raising taxes on higher earners, does seem to me, from the historical evidence, damaging in the medium-to-long term in terms of the amount you then get out of the economy because it is higher earners who are usually the most economically active and producing more economic activity which is ultimately for the betterment of everybody else."

Mr Redwood called on the Tory leadership to state clearly that they would reverse the increase. "I agree with Dominic. I think we need to condemn these tax rises.

"There is no way we should be increasing the top rate at this point. It is an extremely unhelpful move at a time when the world is getting increasingly competitive.

"It is a huge self inflicted wound. It will backfire. I hope we will say we will not do it. Mrs Thatcher made our top rate competitive. It is not as competitive now as it was then so we should not be looking to increase it.

"I think the leadership is moving in that direction. It is not something an incoming Conservative government should be doing."

Mr Osborne has pledged to reduce some taxes but without increasing the budget deficit, forecast to reach £128 billion by 2010.

The shadow chancellor is planning to unveil a series of tax cuts in the coming weeks paid for mainly by lower public spending, including a reverse in Mr Brown's proposed 1 per cent increase in employers' and employees' National Insurance Contributions.

He has hinted at targeted tax cuts to help savers and pensioners, whose incomes have been damaged by recent interest rate cuts. It is understood that proposals being considered include the abolition of the basic rate of tax on savings – which would cost upwards of £2.4 billion – and an increase in tax allowances for the over 65s to boost retirement incomes.